Buying a House in Italy as a Foreigner: The Costs
In our earlier blog we talked about the process involved in buying a house in Italy as a foreigner. Read on to find out what costs are involved in house buying in Italy.
Points to note: VAT, or Sales tax is called IVA in Italy and is currently 22%. So add this amount onto the prices below.
The Bollo: is a mandatory tax in the form of stamps that is slapped on to most contracts or invoices over €77.47. And when I say slapped, you literally do have to buy stamps from the Tabbachi or post office and attach them to the invoice. Phone contracts, some utility contracts, any kind of lease over the amount of €77.47, they are all subject to the bollo. However, it is a per-invoice/contract charge, so you don’t have to pay it for every €77.47 you are invoiced for, it’s a one-time payment on the invoice/contract itself.
The amounts of the stamps are either €2, or €16.
- The € 2 tax stamp is applied to invoices and tax receipts with an amount exceeding € 77.47
- The € 16 revenue stamp is applied to the deeds of public administrations, to corporate or notary documents
However, if the services you are paying for are exempt from IVA (which very few things are in Italy), then only the €2 stamp is added.
As you can probably imagine, there is a long list of rules as to when the bollo should be applied, but in the case of buying property I will keep it relevant!
As a guideline, expect to pay €16 on any invoice for a contract that is over €77.47 and includes IVA, and €2 on any invoice that does not.
If you are buying a house through a real estate agent, they take a percentage (normally around 3% of the purchase price) from both the seller and the owner. There are many articles on the internet which views this negatively, as why would an agent negotiate the best price for you if their commission depends on it? The agents that D&G Design work with are always willing to negotiate the best price – reputation amongst many professionals in Italy is more important than quick money. Realtors invest a lot of time and money to become qualified – you cannot become a realtor in Italy without years of study and qualifications.
As with many industries in Italy, word of mouth is still the most effective and important form of marketing and in our experience, there are few professionals who would risk their reputation for a few hundred euros.
If a house has been on the market for a while, offer a price that is your maximum budget, and stick to it.
Stamp duty is 2% of the cadastral value of the home if you are resident in Italy full time. The cadastral value is generally an amount lower than you have paid for the house, as it’s based on a valuation of the property from several years ago. So normally this works in the buyer’s favour.
OR 9% of the cadastral value if this is your second home in Italy or if you are non-resident. If you are buying as a business rather than as an individual then 9% is applied.
The minimum payment for Stamp Duty is €1,000. So if your house is very low priced, and either 2% or 9% of the property’s value falls below this threshold, you will be charged a flat fee of €1,000.
Note: You have 18 months to become resident in Italy from the date of your house purchase. If it is your intent to become a resident, you will only be charged 2% stamp duty at this stage. Should you not become resident within 18 months, then the government will require the outstanding 7%.
See here for more information about obtaining Italian residency.
Exceptions to Stamp Duty
If your home is deemed a ‘luxury property’, stamp duty is higher, up to 20%, with higher land registry and cadastral taxes.
If it’s what’s classed as an agricultural property, stamp duty will be 10%.
If you’re buying agricultural land, then stamp duty is fixed at 10%.
If the house is a new development and it is your first Italian home, there is no stamp duty but instead IVA will be added to the purchase price at 4% for residents, or 10% for non residents and second home owners. Land registry and cadastral taxes are higher also.
If you build your own home, this is subject to IVA at 4% of the value.
LAND REGISTRY TAX
€50 – fixed rate.
€50 – fixed rate.
These fees are generally fixed for each part of the sale. The notary will pay the above taxes and check that the property is legally registered.
If buying through an agent, they may be able to take care of the preliminary agreement as part of their service. Have the notary do all of the required checks at this stage, whether or not they are handling the preliminary agreement.
If this is a private sale, it’s worth having the notary on board from the beginning. This will cost extra as it’s more work for the notary, but you have peace of mind that everything is being done above-board and properly.
Notary charges can vary from town to town, and are on a scale related to the declared value of the property, to the difficulties of the deed and of the property. (ie how much work they have to do!) A quote can be obtained from a notary before you begin the process.
The taxes above are not subject to IVA, but the notaries fees will be.
Depending on whether you have a lawyer overseeing the purchase of your property, they will charge you based on a percentage of the value of what you’re paying for the property. It’s entirely up to you whether or not you feel more comfortable having a lawyer involved, many people prefer to use an English speaking lawyer to explain each step of the process and assist.
Legal fees are subject to IVA.
GEOMETRA OR CIVIL ENGINEER’S FEES
If the house is an old property requiring restoration or renovation work, we strongly recommend that either a Geometra or Civil Engineer inspects it before you commit to buying. These professionals oversee all building work in Italy and are qualified to tell you exactly what work the property will need. They can also recommend a building company and give you an estimated quote for all works required.
At D&G Design, we have our trusted Geometra’s inspect every property that our clients show an interest in.
The Geometra or Engineer’s fee for overseeing building work is generally 10 – 12% of the total price of the restoration works.
Water, electricity and gas are charged per unit and usually bills are issued every two months. There are name change fees charged by utility providers, even though there is plenty of competition. Some energy companies also take a deposit.
One thing to note is that there are higher unit charges for non-residents or second home owners, so if you’re planning on becoming resident, make sure you have this noted on your contract with your supplier to ensure that you pay the lower rate.
For residents, the TV licence is costed into your electricity bill (two payments per year). Non-residents do not pay a TV licence, but they do pay more for usage.
LOCAL COUNCIL TAX AND CHARGES
IUC (Imposta Unica Comunale – Single Municipal Tax)
This tax comprises three different local taxes, all of which are paid to the local commune (council):
IMU (Imposta Municipale Unica – local commune tax)
Similar to council or city tax and not charged if the house is your first home in Italy (unless it’s classed as a luxury property).
TARI (Tassa Rifiuti – collection of rubbish & garbage)
A minor tax calculated on the size of your property.
TASI (Tassa sui Servizi Indivisibili – local tax for municipal services).
A tax for services in your local area such as street lighting, road maintenance, etc. This is paid if you own the property or rent for a long period.
The council charges apply whether you are resident or not. Ask your notary or lawyer how much the charges currently are at the property you intend to buy, as they vary from town to town.
Should you buy an apartment or flat in a shared building, there will be condominium fees to pay each year.
Please note that this list is not comprehensive, but covers most scenarios that are clients are within. For more information or if you have any questions, or for situations not listed here, please contact us and we deem to find out the information for you.
Alternatively, post any questions below and we will reply, creating a comprehensive, all situations Italy houses buying guide!
For people who have always dreamed of owning an Italian holiday (vacation) home who don’t know where to begin, D&G Design is a design & restoration company that brings foreign buyers together with Italian house sellers. Unlike traditional real estate agents, we source affordable homes and restoration projects and oversee or carry out all works ourselves. As we have bought and restored our own home in Italy, we know exactly what to look for, along with local requirements. We also offer an unbeatable after-sales service, ensuring that our customers are always supported and looked after.
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